FCC proposes record fine on SBC

WASHINGTON (CBS.MW) -- The Federal Communications Commission on Friday proposed to fine SBC Communications a record $6 million for allegedly failing to treat competitors fairly in the territories of the former Ameritech.

When SBC
SBC, +0.00%
received regulatory approval to acquire Ameritech in 1999, the company agreed to several stipulations designed by the agency to increase competition in the local phone sector. The FCC contends that SBC has failed to live up to those agreements.

The SBC denied wrongdoing and said it will be vindicated.

The fine was proposed by the FCC's enforcement bureau, but it has to be approved by the agency's five-member board of commissioners. Typically, companies do not get a chance to fully defend themselves until the proposed fine is aired before the commissioners.

"We are confident that when the full commission reviews our response, it will conclude that SBC acted reasonably and in good faith," the company said in a statement. "Since this has been a restricted proceeding, SBC has been permitted no chance to speak with the commission on this."

In approving the 1999 merger, the FCC said SBC agreed to allow rivals in the Ameritech region to connect to the Baby Bells' network on "terms at least as favorable as those offered to telecommunications carriers in Texas as of August 27, 1999."

Yet the regulatory agency said SBC violated the agreement in each of the five former Ameritech states.

SBC, for its part, called it a highly technical dispute and said the issue is "complex and ambiguous." The company also noted that rivals now serve 12 million phone or access lines in its territories.

The proposed $6 million fine is the largest allowed under the law. While FCC Chairman Michael Powell, a Republican, favors more deregulation, he has repeatedly said that companies who violate existing laws ought to be punished as severely as possible.

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